#TwentyPlenty, a year like no other

A reflection from Dare Okoudjou

I am writing this article after one of the most extraordinary years in our lifetimes. What started as a health crisis in early 2020 quickly turned into many other forms of crisis that shook societies at their core. As governments, businesses and various organisations scrambled to provide relief and keep some sort of normalcy, an unprecedented number of formal and informal jobs were shed around the globe, pushing millions into poverty. The IMF estimates that the global economy faced the worst collapse in nearly a century and shrunk by 4.4% in 2020. Emerging markets faced lasting financial setbacks and were hit the hardest. And Africa was not an exception despite our early hope of a softer blow: Forty-one countries across the continent witnessed a decrease in GDP growth, with the region experiencing its first recession in 25 years.

In international remittances space, there were myriads of early predictions. When I wrote my reflections on digital remittances back in March 2020, the international community was just starting to grasp and quantify the impact of COVID-19 on migrant workers and their families back home. The headlines were grim…' the sharpest decline of remittances in recent history' or 'COVID-19 setting to wipe out US$109 billion that would be sent home this year'. In reality, these early predictions mainly applied to traditional and cash-to-cash services. If there is one thing to celebrate about the peculiar past year, it's the rapid acceleration in digitising all aspects of our lives. And this was extended to how we send money across borders.

At MFS Africa, we believed that amidst these predictions at the global and aggregate levels, remittances would grow in importance and become an even more critical lifeline for many across Africa. We played our part in ensuring that individuals and businesses across the continent could weather the looming economic crisis. As borders closed, we remained open- ensuring that migrants and their families back home have access to secure, instant, low-cost digital channels. And we saw first-hand the accelerated shift to digital remittances, experiencing significant growth in the total value of payments processed digitally via our platform daily. Family remittances from the US to Africa, for instance, flourished, increasing by almost threefold in value.

This shift from cash to digital occurred in tandem with the rise in adoption and usage of mobile money across the continent. Africa is the enduring epicentre of mobile money, and COVID-19 indeed had a catalytic effect on the industry. For instance, markets such as Rwanda and different use cases, including e-commerce, recorded significant growth rates in transactions via mobile money. As a result, we experienced increased demand from existing and new partners for integration with mobile money services.

Today, over 200 million mobile money accounts across 37 markets in Africa are connected to our digital platform. This unparalleled reach has enabled digital MTOs such as Paysend to weather the crisis and become one of the fastest growing MTOs on our network. In 2020, we also partnered with PayPal's remittance service Xoom, allowing their customers in the UK, Europe, and North America to send money to their families' mobile money wallets in seven countries across Africa. Beyond providing a digital channel to diaspora when brick-and-mortar money transfer stores are not open, this partnership enables access to Xoom's transparent and competitive pricing. The region is still the most expensive to send money to with an average cost of 8.19 percent; therefore, such partnerships are instrumental in lowering costs and achieving SDG target 10.c.

With more banks embracing a digital strategy, it is essential to bridge the gap between the banked and mobile money users across inter-and intra-African corridors. Our partnerships with Ecobank and the Banque de développement des Comores (BDC) for instance are bringing greater value and choice to both mobile money and bank customers. Bank termination in markets such as Ghana, Kenya, and Uganda are possible via our network, and we will continue to expand our relationship with banks in receiving and sending markets. As a result, we have an unmatched reach to mobile money and bank accounts across the continent. This positions us strongly for partnership with prominent players in the global payments such as MoneyGram, who joined our network in 2020. These partnerships will make it easier for more consumers and businesses to transfer money within, into, and beyond Africa.

All of which brings me to the year ahead in the digital financial payments in Africa. What makes me most optimistic about the future of payments and remittances in Africa is that habits formed during a crisis have the potential to outlast it. I am hopeful that we will see continued growth in using digital channels and mobile money in new markets and across different verticals (agriculture, health, education, energy, etc.).

We weren't ready for the COVID-19 pandemic last year, but we adjusted to the different ways of living. However, when it comes to inclusive digital payments, the adjustment does not entirely depend on the consumer's shift in behaviour. The foundations need to be in place, with a conducive regulatory environment being the most crucial one. To unlock the digital economy's potential in Africa, we need more countries adopting a tiered regulatory approach, i.e. lower requirements for lower balances/transfer amounts in domestic and cross-border payments. Lack of documentation is also often cited as one of the key barriers to opening a financial account across the continent. Therefore, we also encourage more countries to adopt proportional KYC requirements for domestic and cross-border payments.

As the marathon of COVID-19 vaccinations continues amongst the developed and wealthy nations- we must remember that COVID-19 anywhere is a threat everywhere. Until vaccines reach everyone, we won't fully recover and reach a stronger and more resilient post-pandemic world.

My ultimate wish for 2021 is that, just as we are making borders matter less in digital payment, world leaders will rise to the challenge of making borders matter less in immunity against Covid-19. We can break the cycle of immunity inequality in 2021.